East Midlands businesses from clothing manufacturers to biscuit makers are set to benefit from reduced tariffs as part of the UK-Japan Comprehensive Economic Partnership Agreement (CEPA).
The deal was signed by International Trade Secretary Liz Truss and Japan’s Foreign Minister Motegi Toshimitsu in Tokyo this morning (Friday 23 October), and is the UK’s first major trade deal that goes beyond the existing EU deal.
According to the Department for International Trade (DIT) the deal could benefit over 700 businesses in the East Midlands which exported goods worth around £550 million to Japan in 2019, whilst helping even more sell goods and services to Japan for the first time.
Around 95,000 people work in the UK textile industry which exported more than £175 million worth of textiles and leather products to Japan in 2019.
UK exports including textiles and biscuits will receive access to preferential tariffs, through new and more liberal Rules of Origin (ROO) that would allow UK businesses to source ingredients from anywhere in the world and export to Japan. This could benefit the region’s food and drink manufacturing industry which employs around 61,000 people.
Supported by DIT and headquartered in Ashbourne, Artisan Biscuits has been baking for a century and in 2019 partnered with Japanese importer Tomoe to secure its largest export win to Japan worth £57,000.
Artisan Biscuits Director John Siddall said: “Japan is a sophisticated market that values quintessential British products such as our biscuits, which Japanese consumers like to have with certain types of teas.
“We source the finest quality ingredients from all over the world, but our clotted cream only comes from the West country. A free trade agreement could make it easier to export our biscuits as we continue to grow in the country over the coming years.”
The CEPA could boost UK-Japan trade by £15.7 billion, driving economic growth and increasing UK workers’ wages by £800 million in the long run.
International Trade Secretary Liz Truss gave Minister Motegi Toshimitsu a gift of Stilton Cheese to celebrate signing the deal.
Stilton cheese is among products from the East Midlands which will be officially recognised as a geographical indicator (GI) in CEPA, along with Buxton Blue Cheese and Dovedale Cheese.
The number of GIs for UK goods could increase from seven under the terms of the EU-Japan deal to potentially over 70 under this enhanced agreement.
UK exports to Japan have been growing by an average of 8.2% year-on-year over the previous five years and this free trade deal will provide additional opportunities, with potential benefits including better, higher wages, and lower prices for all parts of the UK.
International Trade Secretary, Liz Truss said: “Today is a landmark moment for Britain. It shows what we can do as an independent trading nation, as we secure modern and bespoke provisions in areas like tech and services that are critical to the future of our country and the reshaping of our economy.
“Trade is a powerful way to deliver the things people really care about. At its heart, this deal is about creating opportunity and prosperity for all parts of our United Kingdom and driving the economic growth we need to overcome the challenges of coronavirus.
“The agreement also has a much wider strategic significance. It opens a clear pathway to membership of the Trans-Pacific Partnership – which will open new opportunities for British business and boost our economic security – and strengthens ties with a like-minded democracy, key ally and major investor in Britain.”
The removal of several trade barriers aims to assist the UK’s 8,000 SMEs already exporting goods to Japan, by offering tariff-free trade on 99% of UK exports to Japan in the long term.
Head of Exports at DIT for the Midlands region, Ian Harrison said: “Businesses in the East Midlands like Artisan Biscuits are key to the UK’s economy, and consumers in Japan appreciate British heritage and quality so I am proud that the region has an exporting relationship with the country.
“This free trade agreement will be very beneficial for the region and the Department for International Trade in the Midlands is excited about helping more local businesses find exporting opportunities in Japan.”
Today’s signing also signals Japan’s commitment to supporting the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), one of the world’s biggest free trade areas, covering 13% of the global economy in 2018 and more than £110bn of trade in 2019.
Other key benefits of the deal include:
- The UK has also secured reduced tariffs for flagship Japanese products into the UK meaning more choice for consumers and cheaper udon noodles with tariff reductions from 26.4% reducing to 0% on 1 January 2021.
- Cutting-edge digital & data provisions that go beyond the EU-Japan deal, including enabling free flow of data, a commitment to uphold the principles of net neutrality and a ban on unjustified data localisation that will prevent British businesses from having the extra cost of setting up servers in Japan.
- Supporting UK car and rail manufacturing jobs at major investors in the UK like Nissan and Hitachi through reduced tariffs on parts coming from Japan, streamlined regulatory procedures and greater legal certainty for their operations.
- Strong tariff reductions on key agricultural products like pork, beef and salmon will benefit farmers and food exporters.
- A boost for UK brands with protections for more iconic UK agricultural products, from just seven under the terms of the EU-Japan deal to potentially over 70, including English sparkling wine, Scottish salmon and Welsh lamb.
- British consumers to benefit from cheaper, high-quality Japanese goods – from udon noodles to Bluefin tuna and Kobe beef.